Cowen Jumps on the Nvidia, AMD Bullish Bandwagon

While AMD and NVDA stocks are higher, Applied Materials is selling off

Josh Selway

May 18, 2018 at 9:35 AM

Financial research firm Cowen and Company initiated coverage on several domestic semiconductor stocks yesterday evening, including Nvidia Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD). Cowen set "outperform" ratings for both NVDA and AMD shares, with respective price targets of $325 and $18, expecting substantial upside from current levels. To be more specific, going from yesterday's closing prices, Nvidia would need to rally more than 31% to reach Cowen's target, and Advanced Micro Devices more than 40%.

This bullish attention is nothing new for the chipmakers, as more and more investors have been waxing optimistic in 2018. A number of analysts have pointed to Nvidia's booming gaming business as a reason to buy the stock, along with its potential in the artificial intelligence space. Cowen agrees with this latter view at least. In the note yesterday, the analyst in coverage said, "We view NVIDIA as the premier AI-driven growth story in semis and possibly the tech industry." NVDA shares have nearly doubled in the past year, and were last seen trading up 0.9% at $249.81.

As for AMD, the stock has enjoyed positive buzz on a few different fronts in the past week. On Monday, J.P. Morgan Securities analysts said to buy June call options ahead of the CoinDesk Consensus blockchain conference. And on Wednesday the shares gained on news George Soros' hedge fund dramatically increased its stake in the chipmaker. The stock was last seen trading up 2% at $13.08.

Looking elsewhere, it's not all positive news in the semiconductor space this morning, with Applied Materials, Inc. (NASDAQ:AMAT) down 7% at $50.21. The chip equipment and services provider reported top- and bottom-line beats in the earnings booth yesterday evening, but its sales forecast for the current quarter was lower than expected. Analysts are taking sides as a result, with Stifel and KeyBanc raising their price targets to $75, while at least five other firms lowered their outlooks on AMAT stock.

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